Hold the phone Pagz..it's easy on bulletin boards to get things mixed up bud..nature of the beast.. but I'm not talking about any settlement thru the normal course of insurance run-off here.
I'm talking about someone actually buying Granite Re's claim to get them out of the way. They need to be gone and the sooner the better. If I'm a well funded investor looking for control I need negotiating leverage.
Why and what for? If Granite RE knows I've allready committed a sizeable sum accumulating Cap Trst Pref'd shares before I approached them they'd also know they could hold out for more to buy their claim.
I would hire an accomplished corporate settlement attorney to craft an iron clad agreement and then approach Granite RE with an offer of $1 Million cash.. and for every 24 hours that pass without a signed deal the offer goes down by $100K.
Here's the thing- Granite RE has no real skin lost in this game. They were awarded $17 Million but it wasn't $17 Million they loaned to AIC and lost to begin with. Cap Trust Pref'd holders, on the other hand, lost $123 Million dollars of cold hard cash. This is about recovery for them. Realistically speaking any settlement money Granite Re actually receives, either from the estate or an investor buying their claim, is pennies from heaven. These 2 claims may be equal on one level but on another they aren't.
In fact our lawyers from Deutsche Bank said as much (only in much more legalistic terms) in their objection to the Granite Re POR in 2009. They called our claim "Senior Indebtedness" and went on to define what that means.
Here is a portion <in italics below> of what they said taken from the court doc:
========== 23. The Indenture defines “Senior Indebtedness” as obligations of the Debtor for money borrowed, obligations evidenced by bonds, debentures, notes or similar instruments, reimbursement obligations with respect to letters of credit issued for the account of the Debtor, capital lease obligations, obligations for claims in respect of derivative products, and guaranty obligations relating to the foregoing.2 The Debentures are only subordinated to those types of claims that are specifically indentified as “Senior Indebtedness” in the Indenture. Moreover, general claims (such as trade payables and accrued liabilities in respect of ordinary course obligations) are specifically excluded from the definition of Senior Indebtedness and are thus not entitled to the benefits of the subordination provisions of the Indenture. See Indenture § 1.1.
24. This point could not be more clear. The Indenture specifically provides that the subordination provisions: are intended solely for the purpose of defining the relative rights of the Holders of the [Debentures] on the one hand and the holders of the Senior Indebtedness on the other hand . . . [and] [n]othing contained in [Article 13] or elsewhere in [the] Indenture or in the [Debentures] is intended to or shall . . . affect the relative rights against the [Debtors] of the Holders of the [Debentures] and creditors of the [Debtor] other than their rights in relation to the Holders of the Senior Indebtedness.”
==========
Does any of this mean Granite Re has to settle for less?..or will settle for less? No..not at all...but they're more likely to imo because they didn't suffer a loss. And if I'm an investor wanting a deal that's how I would approach them.
It's a practical matter. For example - If someone said they would pay you a million dollars for something you never actually spent a dime on would you take $100K and call it good knowing you'll never actually see the million anyway? Probably so... all day long...and twice on Sundays! But if you actually gave that person one million dollars cash and they couldn't pay it back would you be as amiable to accept $100K in return? No way. I'd be insulted...and fighting for more. I suffered a loss.
Once Granite Re is quietly out of the way ..I buy buy buy AICPQ...or I make the holders a tender offer for $1.50 @ share.
-tbc-
btw- I see your next post - NOL's carried forward are good for 20 years. There are 12 years left on those NOLs.
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